In the Matter of Australian Motors SA Pty Ltd Staff Superannuation Fund

[2010] SASC 62

SUPREME COURT OF SOUTH AUSTRALIA

(Applications Under Various Acts or Rules: Civil)

In the Matter of AUSTRALIAN MOTORS SA PTY LTD STAFF SUPERANNUATION FUND

[2010] SASC 62

Judgment of The Honourable Justice Gray

19 March 2010

EQUITY - TRUSTS AND TRUSTEES - APPLICATIONS TO THE COURT FOR ADVICE AND AUTHORITY - PETITION OR SUMMONS FOR ADVICE - JURISDICTION AND IN GENERAL

Application for advice and direction pursuant to section 69, Administration and Probate Act 1919 (SA) and section 91, Trustee Act 1936 (SA) as to whether appropriate to file separate proceedings to seek final determination in relation to construction of Confidential Memorandum and Trust Deed - whether seeking of advice appropriate in circumstances - upon death of Morris Hassan, death benefit became payable from the Australian Motors SA Pty Ltd Staff Superannuation Fund - trustee of Staff Superannuation Fund seek to file separate proceedings to determine whether the Confidential Memorandum signed by Morris Hassan constitutes a Binding Nomination Form as to the distribution of the death benefit - other related proceedings contested before this Court in which widow of Morris Hassan seeks greater provision from estate of Morris Hassan - determination of Superannuation dispute likely to have material impact on that proceeding - appropriate case in which to seek advice and directions - all parties agreed as to appropriateness.

Administration and Probate Act 1919 (SA) s 69; Trustee Act 1936 (SA) s 91; Supreme Court Civil Rules 2006 (SA) r 206; Inheritance (Family Provision) Act 1972 (SA), referred to.
In the Estate of  Hassan (Deceased) (2008) 100 SASR 464; Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; Public Trustee v O'Donnell (2008) 101 SASR 228; Re Magarey Farlam Lawyers Trust Accounts (No 2) (2006) 96 SASR 232; Jeavons v Chapman (No 2) [2009] SASC 3, considered.

In the Matter of AUSTRALIAN MOTORS SA PTY LTD STAFF SUPERANNUATION FUND
[2010] SASC 62

Civil

GRAY J.

1. On 19 February 2010 I provided advice in the within proceeding that it would be proper for EM Squared Pty Ltd, as the sole trustee of the Australian Motors SA Pty Ltd Staff Superannuation Fund, to file independent proceedings pursuant to rule 206 of the Supreme Court Civil Rules 2006 to seek a final determination with respect to the following question:

   Does the confidential memorandum signed by the late Morris Charles Hassan dated 29 April 2005 constitute a Binding Nomination Form served upon the Trustee for the purposes of clause 9.5(a)(i) of the trust deed governing the Australian Motors SA Pty Ltd Staff Superannuation Fund (“Fund”)?

   I now provide my reasons for giving that advice.

2. Morris Hassan died on 23 February 2006.  Upon his death, a death benefit became payable from the Staff Superannuation Fund in respect of Morris Hassan.  He was then aged 62 years.  The death benefit that has become payable is in excess of $3,000,000.00 and has not yet been paid. 

3. In earlier proceedings in this Court[1] an informal document was admitted to Probate as the last will and testament of Morris Hassan.  Included in that document appears the following:

   Superannuation

   To be split equally between Margaret, Jeremy and Jane.

   Binding Nomination required.

   [1]    In the Estate of Hassan (Deceased) (2008) 100 SASR 464.

4. In an affidavit filed by Margaret Ann Hassan, the widow of Morris Hassan, she has deposed inter alia:

   As at the date of swearing this affidavit the death benefit payable from the Fund in respect of Morris has not been distributed and the Applicant has not passed any resolution in relation to its distribution.  The delay in distributing the death benefit has occurred primarily because there has been some uncertainty and litigation in relation to Morris’ estate since his death.  In this regard, I note that on 1 February 2008 this Honourable Court delivered a judgment in respect of the Grant of Probate of an informal document executed by Morris, entitled “Confidential Memorandum” (Confidential Memorandum) dated 29 April 2005.  …

   [The applicant’s solicitor] has now advised me that the SIS Act requires the Applicant to cash Morris’ death benefit from the Fund as soon as practicable.

   [The applicant’s solicitor] has advised me that if there is a “Binding Nomination Form” within the meaning of the Current Deed the Applicant is required to distribute the death benefit in respect of Morris from the Fund in accordance with that “Binding Nomination Form”. I am further advised that if there is no “Binding Nomination Form”, then the death benefit in respect of Morris must be distributed to one or more of the legal personal representatives of Morris or his “Dependants” within the meaning of the Current Deed, at the discretion of the Applicant.

   To the best of my knowledge, the only people who met the definition of “Dependant” of Morris within the meaning of the Current Deed as at the time of his death are:

   each of his three children  - Jane, who was born on 9 July 1973, Jeremy, who was born on 22 July 1970 and Mathew Morris Hassan, who was born on 18 July 1968; and

   me, as Morris’ spouse.

5. Two of the children of Morris Hassan from an earlier marriage, Jane Monica Heyburn and Jeremy Gordon Hassan assert that the Confidential Memorandum is a binding nomination form within the meaning of the Trust Deed. 

6. Margaret Hassan has further deposed:

   [The applicant’s solicitor] has advised me that, in its view, the Confidential Memorandum is not a “Binding Nomination Form” within the meaning of the Current Deed in that:

   it is not in the form specified in Schedule 2 of the current Deed, nor in any other form promulgated by the trustees of the Fund at any relevant time; and

   there is a doubt as to whether it has been served on the trustees of the Fund as required by clause 9.5(a)(i) of the Current Deed.

   However, [the applicant’s solicitors] has advised me that the Applicant should seek to have the matter resolved prior to distribution the death benefit.

7. The application is advanced pursuant to section 69 of the Administration and Probate Act 1919 (SA) and section 91 of the Trustee Act 1936 (SA).

8. Section 69 of the Administration and Probate Act provides:

   (1)     The Public Trustee shall, and any trustee, executor, or administrator may, when in difficulty or doubt, apply to a Judge for advice or direction as to matters connected with the administration of any estate, or the construction of any will, deed, or document.

   (2)     Such application may be made either without notice to or upon summons served upon any of the parties interested.

   (3)     Any person interested in any estate, who is dissatisfied with the conduct of the Public Trustee in any matter connected with the management or administration thereof, may apply to a Judge by summons to be served upon the Public Trustee to review such conduct.

   (4)     A Judge may, upon the hearing of an application under this section, make any order, declaratory or otherwise, that he sees fit as to the administration of the estate, or the construction of the will, deed, or document, which is the subject of the application, and also as to the costs of the application.

   (5)     Any such order made in the absence of an interested party shall have the same effect, or be of the same force or validity, so far as regards protection to the Public Trustee, or other trustee, or the executor, or administrator, as if the same had been a decree or order made in an action where all parties concerned were represented.

   (6)     The Judge may refer any question of law arising on an application under this section for the opinion of the Supreme Court, or may direct an issue to be tried by, or an action to be instituted in, the Supreme Court.

9. Section 91 of the Trustee Act is in the following terms:

   Sections 69 and 70 of the Administration and Probate Act 1919 apply to trustees as defined by this Act, and section 90 of this Act shall extend to applications under either of the same sections, but without limiting the powers of the Supreme Court, apart from the said section 90, with regard to such applications.

10. The High Court had occasion in Macedonian Orthodox Community Church[2] to consider the construction and reach of section 63 of the Trustee Act 1925 (NSW) in relation to the giving by the Court of advice or directions to a trustee. Their Honours treated their observations as having application in regard to parallel legislation throughout Australian and, in particular, section 91 of the Trustee Act 1936 (SA).

    [2]    Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42.

11. In the course of her reasons, Kiefel J noted the non-adversarial nature of section 63 and observed:[3]

    Proceedings provided for by s 63 do not involve the determination of a controversy, but rather the giving of advice or direction to a trustee with respect to questions of the kind referred to in the section. Section 63 is an exception to a Court's ordinary practice of deciding disputes between competing litigants, as Palmer J observed. But his Honour's orders were not determinative of the parties' rights. The advice given was as to whether, and upon what terms, proceedings should be pursued in order to finally determine the controversy as to the terms of the trust upon which the Association held property. The advice was advice respecting the interpretation of the trust instrument and was therefore within power. The interests of the parties and the liability of the Association as trustee were to be determined, but in the Main Proceedings.

    It may be inferred that their Honours in the Court of Appeal considered that the connection of the advice to the pursuit, or defence, of the Main Proceedings to be so important a factor as to foreclose the giving of such advice. I agree with the plurality that the discretion is not to be exercised by reference to some such overriding consideration. In exercising the discretion the Court should be guided by the scope and purposes of the section. The principal purpose of the section, and the opinion, advice or direction given under it, is the protection of the interests of the trust. Another purpose is the protection of a trustee who is acting in that regard and upon advice. Securing the latter purpose may ensure the attainment of the principal purpose, by removing the concern of a trustee about exposure beyond their usual indemnity.

    [3]    Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42 at [195]-[196].

12. The other members of the Court, Gummow ACJ, Kirby, Hayne and Heydon JJ, in their joint judgment, undertook a detailed analysis of the progenitor United Kingdom provisions.  In the course of their reasons a number of general propositions were identified and discussed, including the following important propositions:[4]

    [4]    Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42 at [55]-[74].

    -Provisions conferring powers to the court are not to be subject to implied limitations.

    -Section 63 contained no implied limitations on the power to give advice.

    -The only jurisdictional bar to relief pursuant to section 63 or its equivalent, is that the applicant must point to the existence of a question respecting the management or administration of trust property or a question respecting the interpretation of the trust instrument.

    -Nothing in section 63 limits or mandates consideration of discretionary factors.

    -The procedure pursuant to section 63 and its equivalents is summary in character.

    -The provisions operate as an exception to the Court’s ordinary function of deciding disputes between competing litigants as they afford a facility of giving “private advice” as the function of the advice is to give personal protection to the trustee. 

    -Section 63(2) precludes any trustee, who acts in accordance with the private advice, from being held liable for breach of trust in the event that in conventional proceedings it is later held that the legal position does not correspond with the advice given, so long as the proviso to section 63(2) is satisfied.

    -The application of section 63 will tend to vary with the type of trust involved and as a consequence the context of the application for advice will be important.

    -Section 63 has a relationship to rights of indemnity. Provision is made for a trustee to obtain judicial advice about the prosecution or defence of litigation in recognition of both the fact that the office of trustee is ordinarily a gratuitous office and the fact that a trustee is entitled to an indemnity for all costs and expenses properly incurred in performance of the trustee's duties. Obtaining judicial advice resolves doubt about whether it is proper for a trustee to incur the costs and expenses of prosecuting or defending litigation. No less importantly, however, resolving those doubts means that the interests of the trust will be protected; the interests of the trust will not be subordinated to the trustee's fear of personal liability for costs.

13. The above propositions were discussed in great depth in Macedonian Orthodox Community Church, where the Court analysed the purpose and function of the provision under consideration.

14. Decisions of this Court that predated the High Court decision in Macedonian Orthodox Community Church recognised the close correlation in the powers of the Court under section 69 of the Administration and Probate Act and section 91 of the Trustee Act.[5]

    [5]    See Re Magarey Farlam Lawyers Trust Accounts (No 2) (2006) 96 SASR 232 at [20] as adopted in Public Trustee v O’Donnell (2008) 101 SASR 228 at [25] (Gray J); the Court’s power to provide advice and direction was subsequently discussed in Jeavons v Chapman (No 2) [2009] SASC 3 at [50] (GrayJ).

15. Other proceedings are present before this Court in which Margaret Hassan is seeking, pursuant to the Inheritance (Family Provision) Act 1972 (SA), greater provision from the estate of Morris Hassan. Those proceedings are contested by Jane Heyburn and Jeremy Hassan. An inheritance claim by Matthew Hassan has been settled and he is taking no part in either of the present proceedings.

16. In the course of interlocutory proceedings all parties, being represented in their respective capacities, agreed that there needed to be a determination of the dispute with respect to the Superannuation proceeding before the Court could sensibly address the Inheritance Act proceeding.  Margaret, Jane and Jeremy, in their capacity as interested persons with respect to the Superannuation proceeding, all agreed that the advice and directions that I have given should be given, and all have further agreed that there be an early disposition of that proceeding. 

17. In my view, this was an entirely appropriate case in which to seek advice and directions.  There is a dispute as to the proper construction of the terms of the Trust Deed and as to the effect of the Confidential Memorandum.  The resolution of the dispute is likely to have a material impact on the Inheritance Act proceeding.  It is appropriate that the trustee, EM Squared, in the interests of the trust and in its own interests, proceed to have the questions at issue determined by this Court.  In the particular circumstances of the present proceeding, all interested parties have agreed to this course of action.